Construction Law Updates

Issuing payment claims – timing and recent developments

No. 1601 – 4 February 2016

In this Update we look at timing considerations when deciding to issue a payment claim.

A pre-condition to a valid payment claim issued under the Security of Payment legislation is that it must be issued at a time when a right to issue has arisen.

The issue of timing is surprisingly complex and, given that a failure to satisfy this pre-condition can result in an adjudicator dismissing the claim without any assessment of the substantive merits, we have prepared this update to provide some clarity on the question of timing, and in doing so have referenced and described some key relevant recent cases.

The right to fix defective work

No. 1509 – 27 October 2015

In Update 1509 we examine the balancing act between the builder’s right to rectify its defective work and the owner’s right to insist on the rectification work being done in a particular way. In general, when defective work is found on a completed build, the builder has a right to go back and rectify.

However, this is a right that can be lost by the builder’s conduct, such as a persistent refusal to admit the scale of the problem. Equally, owners can jeopardise their right to claim compensation for work done by others if they unreasonably insist on unnecessary work.

The NSW Supreme Court has recently set out the guiding principles that inform the decisions to be made by parties in this situation.

“One shot” to adjudicate

No. 1507 – 27 August 2015

Adjudication of payment disputes has become commonplace under the Security of Payment legislation now in force across Australia. Sometimes contractors make an error when applying for adjudication and realise that the adjudication will end badly if they continue. In those circumstances, what does the contractor do? Should the contractor withdraw the application or restart the whole process?

A recent decision of the Court of Appeal of the Northern Territory makes clear the position under the Act as it applies to the Territory.

Statutory declarations and payment claims

No. 1506 – 27 August 2015

Introduction The commercial construction industry is familiar with the contractual requirement to provide a statutory declaration with progress claims.  Most construction contracts require contractors to certify they have paid all the money due to their subcontractors and suppliers in relation to the work they are claiming for before they are entitled to the progress claim. […]

Buying from an owner builder

No. 1505 – 24 July 2015

This Update examines the liability of owner builders when they sell their residence following substantial renovations. This decision from the NSW Court of Appeal may be of particular interest given the current popularity of reality TV shows about home renovations. In this case the purchasers of the renovated property suffered massive losses due to substantial hidden defects. Although the purchasers were initially awarded over $1 million at trial, ultimately they were unable to recover any funds. Read on to find out more.

Terminating the engagement

No.1504 – 5 June 2015

A recent NSW Supreme Court decision in Southern Han Breakfast Point Pty Limited v Lewence Construction Pty Limited [2015] NSWSC 502 examines whether an adjudicator has the power to make a determination that the builder is owed a further progress payment under the AS4000-1997 contract after the work has been taken out of its hands.

This decision is likely to have persuasive influence in SA and other States that mirror the NSW legislation and may provide a strategic advantage to principals.

A new Draft Standard – AS11000

No.1503 – 12 May 2015

Standards Australia has released a draft version of AS11000 intended to merge and replace the suites of contracts related to AS2124:1992 and AS4000:1997.  The draft was put together with input from a number of organisations including Austroads, the Australian Procurement and Construction Council, the Australian Institute of Architects, the Civil Contractors Federation of Australia, the […]

Dropbox for service?

No. 1502 – 16 March 2015

This Update deals with the service of documents by electronic methods in the construction industry. While Courts are slowly moving towards the adoption of electronic systems for their own purposes, it appears that systems such as Dropbox or Aconex are not acceptable to the Court when it comes to ensuring that documents have been formally served on another party. While electronic service is convenient, it remains important that the other party has “received” the document.

Can a letter be a payment schedule?

No. 1501 – 12 February 2015

The Supreme Court of South Australia has recently clarified the requirements of a payment schedule under the Building and Construction Industry (Security of Payment) Act 2009 (SA) in Linke Developments Pty Ltd v 21st Century Developments Pty Ltd [2014] SASC 203.

The case confirms the test to be applied is whether a respondent to a payment claim has provided a payment schedule that includes sufficient particularity so as to enable the claimant to decide whether it wants to pursue its claim or not.

Idle or hanging around?

Update No. 1407 – 17 December 2014

In this Update we look at a recent NT Supreme Court review of an adjudicator’s determination as to standby charges for a dredge working on the Marine Supply Base project. Neither party had brought to the attention of the adjudicator the point on which he decided whether the progress payment was due. While the Court said that the adjudicator was entitled to consider the point, it found he had denied natural justice to them by not asking for submissions on it.

Adjudication after termination?

No. 1406 – 27 November 2014

Update 1406 looks at a recent decision of the Queensland Supreme Court where a concretor successfully claimed money from a head contractor through adjudication after the subcontract was terminated. The Court was asked to decide whether the adjudicator had made an error. We also look at the SA and NSW legislation on the same point and note a small but significant difference that will probably result in a different outcome.

Just pay the money now

No. 1405 – 20 October 2014

A recent Queensland Supreme Court case where a contractor sought an injunction to prevent enforcement of a $14 million adjudication award shows that Courts remain committed to the purpose of the Security of Payment legislation: keeping cash moving in the construction industry.

When the principal delays the work

No. 1403 – 26 September 2014

The principal sometimes delays a construction project and in doing so breaches the building contract. If the contract terms allow the principal to then deduct liquidated damages from the contractor’s final payment because the project runs late, is this legal? The answer may depend on whether the contractor asked for an extension of time and on where the work is being done. Read our Update on the prevention principle and time bar clauses.

Ignoring a Payment Claim

No. 1404 – 5 September 2014

The NT Supreme Court has very recently clarified how the Construction Contract (Security of Payments) Act operates when a payment claim is ignored. In the similar legislation applicable in SA and the Eastern States, contractors have to promptly respond to a payment claim with a payment schedule to avoid liability for the full amount of the claim. The NT and WA adopted a less stringent regime and it has not been clear what liability arises when a payment claim is ignored. That situation has now changed.

Time bar clauses – might they be void?

No. 1402 – 22 August 2014

Commercial construction contracts often include time bar clauses, requiring the contractor to give prompt notice of any possible delay to practical completion.

Failure to give notice within the time allowed is sometimes relied on to deny the contractor an extension of time. In this Update we discuss recent developments that may cast doubt on the validity of some time bar clauses.

When can you rely on the subcontractor?

No. 1401 – 15 August 2014

In this Update we look at the liability of subcontractors for poor workmanship and whether the head contractor is required to closely monitor their workmanship to avoid liability for negligent work.

Mining or Construction?

No. 1307 – 15 November 2013

In this Update we look at the difficulties that can arise when a contract governing work in the mining industry includes the performance of both construction work and mining work and a disputed payment claim is then referred to adjudication.

Adjudication Anyone?

No. 1305 – 17 September 2013

Update 1305 reports on Romaldi Constructions’ ongoing battle with its subcontractor over an adjudication.
Romaldi applied to the District Court after its subcontractor obtained a determination from an adjudicator that it should pay money to the subcontractor. The District Court made orders that Romaldi did not have to pay the money to the subcontractor and instead could pay it into Court. The Court was then going to decide who should get the money. The subcontractor appealed to the Supreme Court and Justice Anderson has recently handed down the decision we report on.
Justice Anderson’s decision has wide implications for subcontractors and head contractors as to the power of the new adjudication regime and in effect restores faith in the new regime. We have recently learned that Romaldi has appealed the decision of Justice Blue to the Full Court of the Supreme Court of South Australia.

Unjust and Biased?

No. 1306 – 29 August 2013

Construction Law Update 1306 is the first in a series of Updates on recent Court decisions likely to impact on the operation of South Australia’s new adjudication legislation. Fenwick Elliott Grace acted for Built Environs in the first Supreme Court challenge to an adjudicator’s determination on the basis of a breach of natural justice, bias and other grounds. Justice Blue has carefully examined the Protectavale case and found that cumulative progress claims are permissible where the contract allows for them. The Court’s decision shows that consultants with links to nominating authorities must look for potential conflicts of interest when they advise clients.